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Deloitte India Report: Brand identity is low and 6-7 years between car purchases

Purchase behaviour when buying an automobile stresses not only on a brand and perceptions around it but the fact that a car is bought for a family and thus after sales service, vehicle reliability and re-sale value are considered when shortlisting an automaker thereby ensuring that several brands are taken into account.

Mr. Kumar Kandaswami, Senior Director – Deloitte Touche Tohmatsu India Private Limited said, “Contrary to the popular notion that car buying is an emotional decision, rationality has come out as a strong aspect amongst Indian buyers. Once primary reasons to buy a car such as space, family requirements or need to upgrade are fulfilled, buyers look for quality of service, product reliability and re-sale value. Fuel efficiency is no longer a unique differentiator to attract consumers; presumably, it is a table-stake matter. Given these factors, it becomes extremely important for the OEMs to manage the expectations of the consumers appropriately through the life cycle of the product to be considered favourably for the next purchase”. Purchase drivers point to a car for the family and driver first time buying behavior irrespective of age and gender. Reliability, dealer service and resale value determine choice.

For repeat buyers, technology and larger space holds importance keeping in mind an aspiration to upgrade. Repeat buyers too look at reliability, dealer services and resale value apart from sophistication in final decision making.

When it comes to changing their cars, average time between purchases of two cars is likely to be 6-7 years. In case of a new car purchase, males drive 55,000 km or more and female drivers 45,000+ km before ditching their car.

Future usage trends point to increased share of personal cars over the next 5 years at the cost of other mobility solutions driven by Gen Y and women drivers. Time to own a car is also likely reduce from the 6+ years to about 5.5 years.

Both first time and repeat buyer consider 3–5 brands before making their final selection. SUV and Mini-Van owners look for more options before making their final decision as compared to hatchback and sedan buyers. Car value proposition for luxury and no-luxury cars is scrutinised just the same. For repeat purchases, buyers don’t behave very differently from the first time buyers indicating that they do not identify themselves with a brand, whether in personality or performance.

Rural buyers look out for limited brands in comparison to urban or semi-urban buyers considering available choices and price point consideration.

A small but increasing group of urban population is turning to a single brand. This may be attributed to brand familiarity, loyalty programs of OEMs, or aspirational value offered by an automaker at a given time for a particular car.

Increased car price prompts comparison shopping with Gen X considering more brands as compared to Gen Y consumers. Gen X populace who own a car at a price between Rs.6-8 lakhs tend to evaluate more company’s equating to more than 40% evaluating 6 or more cars. Less than 20% of Gen Y consumers evaluated 6 or more cars in a price range.

Sedans are top priority for current hatchback owners, and SUVs for current sedan owners. Respondents with cars in the price range of Rs.2-6 Lakhs are more likely to consider sedans for their next purchase stressing on aspiration to purchase a larger car. 50% of SUV owners wish to buy a SUV again.

When it comes to brand perception, car owners start with a long-list brands, which is tweaked down to determine a serious set of possibilities. For existing car owners, SUV owners considered more brands as compared with Van/mini-van users. They do consider a wider product types to begin with.

Car owners seemed to be reasonably happy with their choice, and are likely to consider several brands when they are in the market to buy their next car. The onus lies upon OEMs to convert their current satisfaction levels into brand loyalty and repeat purchase.

The research findings of this report are based on a survey conducted by Deloitte from 1813 respondents in India, of which 1066 respondents comprising 59% of the survey population belong to Gen Y (19-36 years), while 22% belong to Gen X (37-48 years) and 16% belong to the Baby Boomers (49-67 years) segment.

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